Welcome to the latest issue of the KHQ Super Alert. This week, four separate Bills have progressed in Parliament, amended Prudential Standards SPS 510 and SPS 530 were registered on the Federal Register of Legislation, and the Minister for Financial Services issued a media release stating the government’s intention to overhaul and increase the ‘transparency requirements’ for superannuation funds.
APRA – Speech on risk culture, cyber risk, and operational resilience released
On 24 November 2022, APRA released a speech given by its General Manager of Governance, Culture, Remuneration and Accountability, Mr Stuart Bingham, titled ‘[t]he power of “Why”’. In it, Mr Bingham talks about a strong risk culture being essential for ‘effective risk management outcomes that support an organisation’s financial and operational resilience’ and what this risk culture means for entities. He goes on to discuss ‘three significant issues regulated entities will need to navigate over the coming year’; these being, the implementation of the Financial Accountability Regime (FAR), ‘the growing spectre of cyber risk’, and ‘APRA’s enhanced prudential requirements around operational resilience’.
Click here for details.
Parliament – Legislation to extend financial reporting and auditing requirements to super funds
On 23 November 2022, Treasury Laws Amendment (2022 Measures No. 4) Bill 2022 was introduced to the House of Representatives. It was referred to the Senate Economics Legislation Committee (Committee) for review the following day. As mentioned in our 13 August 2021 and 25 February 2022 Super Alerts, this Bill seeks to extend the ‘financial reporting and auditing requirements in Chapter 2M of the Corporations Act to apply to [RSEs]’ with effect from 1 July 2023. This Bill was previously known as the Treasury Laws Amendment (Streamlining and Improving Economic Outcomes for Australians) Bill 2022 and was introduced to Parliament earlier this year. However it lapsed upon dissolution of Parliament prior to the Federal election.
The report from the Committee is due on 25 January 2023.
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Parliament – Legislation to simplify corporations law
On 23 November 2022, the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2022 was introduced to the House of Representatives. It was referred to the Senate Economics Legislation Committee (Committee) for review the following day. According to the Explanatory Memorandum, the Bill proposes to (amongst other things):
- amend the Corporations Act 2001 (Cth) to ensure ‘that regulatory bodies in the Treasury portfolio can hold hearings and examinations using technology’ (see our Super Alert of 2 September 2022 in relation to the Treasury consultation);
- implement ‘recommendations and other suggested improvements identified by the [Australian Law Reform Commission] in Interim Report A to simplify and improve the navigability of Australia’s financial services laws’ (see our Super Alert of 3 December 2021 for a summary of the report);
- ‘transfer longstanding and accepted matters currently contained in ASIC legislative instruments into the primary law’ (see our Super Alert of 26 August 2022 in relation to the Treasury consultation); and
- amend the SIS Act to:
- allow notices of regulator decisions ‘in relation to the disqualification, confirmation, revocation or variation of a person’ to be ‘published by notifiable instrument instead [of] by notice in the Gazette’;
- clarify that trustees ‘can use technology to hold annual members’ meetings’;
- amend the equal representation rules in section 117 ‘to ensure it captures all governance structures permitted under Part 9 of that Act’ (see our Super Alert of 9 September 2022 in relation to the Treasury consultation).
The report from the Committee is due on 25 January 2023.
Click here for details.
Minister for Financial Services – ‘Increasing super fund transparency’ announcement
On 23 November 2022, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, issued a media release in relation to increasing the transparency of superannuation funds. According to Mr Jones, the government’s proposals include:
- ‘[i]ntroducing legislation aligning super funds’ financial and accounting reporting obligations with those on public companies. This includes filing annual, publicly available financial reports with ASIC’ (see the first news item above in relation to this);
- ‘[l]aunching new annual Super Transparency Report, a single source of granular, consistent information for members to compare funds’ performance and expenditure’; and
- ‘[r]eforming existing rules so every reporting stream serves a distinct purpose, eliminating duplication and enhancing clarity’.
Click here for details.
Legislation – SPS 510 and SPS 530 registered as legislation
On 22 November 2022, Prudential Standards SPS 510 Governance and SPS 530 Investment Governance were registered on the Federal Register of Legislation. See our 22 July 2022 Super Alert for details on the changes to SPS 530.
In relation to the amendments to SPS 510, the Explanatory Statement provides that ‘[w]ith the commencement of CPS 511 on 1 January 2023, a number of existing requirements relating to remuneration…currently set out in…SPS 510, will become redundant as these matters will be covered by new requirements in CPS 511’. These amendments will apply to trustees from 1 July 2023 if they are ‘significant financial institutions’ (see our 22 July 2022 Super Alert for details about the proposed changes to the definition of a significant financial institution).
Click here and here for details.
APRA – Quarterly superannuation statistics released
On 22 November 2022, APRA released the September 2022 ‘Quarterly Superannuation Performance publication and the Quarterly MySuper Statistics report’. As at 30 September 2022, superannuation assets totalled over $3.3 trillion, being a 3.2 per cent decrease over the last year. There was a total of $150.2 billion in contributions over the year, with a 10.4% increase in employer contributions ($111.0 billion) and a 17.2% increase in personal member contributions ($36.6 billion).
Click here for details.
Parliament – Report into the increase of maximum penalties for breaches of privacy laws tabled in Senate
On 21 November 2022, the Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022 was introduced to the Senate and on 22 November 2022 the Legal and Constitutional Affairs Legislation Committee (Committee) tabled its report in relation to the Bill. As mentioned in our 28 October 2022 Super Alert, this Bill seeks to increase the maximum penalties for serious or repeated breaches of Privacy Laws.
The Committee recommended that:
- ‘the Attorney-General’s Department…define the terms ‘serious interference’ and ‘repeated’ interference and that the Australian government implement such a recommendation’
- ‘the Attorney-General’s Department…examine the appropriateness of section 5B providing for any additional ‘Australian link’; and
- ‘[s]ubject to the above recommendations…the Bill be passed’.
Click here and here for details.
Parliament – Report into faith-based performance test tabled by Senate Committee
On 17 November 2022, the Senate Economics Legislation Committee (Senate Committee) tabled its report into the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022 which seeks to amend the ‘Your Future Your Super’ (YFYS) performance test for faith-based products (see our 22 July 2022 and 16 September 2022 Super Alerts).
The report includes the Senate Committee’s recommendation that the Bill be passed. It also includes a Dissenting Report from Coalition Senators and their recommendations that the amendments should only be extended to trustee-directed choice options; and the MySuper performance testing should ‘remain solely focused on the best financial returns for members, without exception’. Both the Coalition Senators and the Australian Greens recommended that any performance test amendments should be deferred until after the broader YFYS review is completed.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), and Natalie Cambrell (Director).
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